How to sharpen and consolidate your differentiation?
Differentiation is one of the most sought after generic strategy. It consists in delivering greater value, that customers are willing to purchase at a premium price. Well conducted differentiation strategies translate into superior financial performance, as iconic companies like Coca-Cola or Apple exemplify.
When we think of differentiation, we tend to think of product or service differentiation, whereas a company can differentiate itself at every point of contact with its clients. Analyzing your client experience will provide you with insightful points of differentiation. Below is a non-limitative list of opportunities to differentiate during the entire client’s experience. Can you make this whole process more fun, more convenient, more satisfying, less irritating, less worrisome?
- Clients become aware of their need for your product or service
- Clients find your offering
- Clients make the final purchasing decision
- Clients order, purchase and pay
- Your product or service is delivered
- Your product is stored. It is installed. It is transported.
- Your service is consumed.
- What your clients are really using your product or service for?
- Clients need help.
- Your products is repaired or serviced
- Clients need to return or exchange
- Clients do no longer use your product. Clients need to dispose of it.
For differentiation strategy to be well executed, it has to be well-defined and easily understood by every employee, especially frontline agents. What are the sources of differentiation? Do customers agree? Research shows that
- most management teams spend little time discussing or measuring the sources of differentiation of their company and don’t agree on what they are;
- 80% of managers think their companies are strongly differentiated, when fewer than 10% of customers feel the same (Zook &Allen, 2011).
Differentiation has to rest on a few core resources and processes that reinforce one another (see our post on business model).
There are two reasons why differentiation tends to fade with time : it is imitated or undermined by competition ; growth breeds bureaucracy, complexity and complacency. Companies drift away from their founder’s beliefs and core capabilities (see the representative case of Starbucks).